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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Models where firms agree to mutually improve their situation






2. The difference between total revenue and total explicit and implicit costs






3. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






4. 0 < Ei < 1






5. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






6. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit






7. The change in quantity demanded resulting from a change in the price of one good relative to other goods






8. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






9. Demand for a resource like labor is derived from the demand for the goods produced by the resource






10. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






11. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






12. Ei > 1






13. A firm that has market power in the factor market (a wage-setter)






14. TR = P * Qd






15. The output where ATC is minimized and economic profit is zero






16. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.






17. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






18. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit






19. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






20. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






21. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






22. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






23. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






24. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






25. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






26. The additional cost incurred from the consumption of the next unit of a good or a service






27. Ed = 0 - no response to price change






28. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






29. The difference between total revenue and total explicit costs






30. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






31. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






32. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






33. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






34. Two goods are consumer substitutes if they provide essentially the same utility to consumers






35. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






36. AFC = TFC/Q






37. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






38. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






39. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






40. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






41. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






42. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






43. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






44. Ed < 1






45. The practice of selling essentially the same good to different groups of consumers at different prices






46. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






47. ATC = TC/Q = AFC + AVC






48. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






49. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






50. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax